Although it has such an antiquated name, Bailment is the term given to a very common form of a legal relationship which most people will have experienced.
A Bailment can arise in both personal and commercial situations. Examples include: leaving clothing with a dry cleaners to be cleaned, leaving a car with a garage to be repaired, hiring equipment or a vehicle, or depositing goods into a safety deposit box.
Bailment usually arises where one person, the bailee, is voluntarily and consensually in possession of goods which belong to another person; the bailor. Usually the bailment arises as a consequence of the bailee becoming engaged to perform a specific task in respect of the bailor’s goods, for example to repair the goods or to store the goods for an agreed length of time.
Often the bailee is therefore paid for the service they are providing, and there will be a contract governing the relationship between bailee and bailor.
As a result of the bailment, the bailee and bailor will then owe duties to each other, for example, a duty for the bailee to perform the task for which the bailment arises, and a duty for a bailor to pay the bailee any agreed fees. Where there is a contract in place, this will usually set out additional duties and obligations owed between the parties. Also, the nature of the bailment may cause additional statutory duties to be impliedly owed between the parties, for example, in respect of hiring goods, implied terms under the Supply of Goods and Services Act 1982.
In some circumstances bailment arises without the consent or even knowledge of the bailee, this frequently happens in the case of landlords. Nonetheless, the bailee will still owe some duties to the bailor in such circumstances.
The duties owed between bailee and bailor, particularly by the bailee, can therefore be significant and extensive and arise without agreement. Additionally, given that the relationship concerns the bailee controlling the bailor’s, often valuable, property, such as a vehicle; it is not uncommon for disputes to arise out of bailment relationships.
Commonly disputes between bailee and bailor arise from the performance of the task which the bailment was created to facilitate and examples might include a dispute over the bailee’s quality of work or level of fees. Although these disputes might relate to relatively straight forward breach of contract issues, there are significant additional factors that can arise directly from the bailment relationship. For example, if a garage repairs a vehicle, however the owner of the vehicle refuses to pay their fee, must the garage release the vehicle? Are they entitled to sell the vehicle to recover their fees? It can easily be that a bailee who acts incorrectly exposes themselves to a much larger claim.
It is therefore important that in the event of a dispute involving bailment, all of the issues are fully considered. It is also important for individuals and businesses who are likely to become bailees to fully understand what this means, what liabilities that can be exposed to as a bailee, what action they can take to mitigate these risks and what action can be taken to bring a bailment to an end.
Published on 8 July 2021